HomeMy WebLinkAboutCS 44-09
City REPORT TO
EXECUTIVE COMMITTEE
PICKERING Report Number: CS 44-09
Date: December 14, 2009
80
From: Gillis A. Paterson
Director, Corporate Services & Treasurer
Subject: 2009 Internal Loans and External Debentures
Recommendation:
That Report CS 44-09 from the Director, Corporate Services & Treasurer regarding
internal loans and external debentures be received for information.
Executive Summary: This report is being provided to Council for information and
confirmation of internal loans and debentures financing undertaken in 2009. This
information is required for auditing purposes.
Financial Implications:
Internal Loans
There was no provision in the 2009 Capital Budget for projects to be financed by
internal loans. Capital projects requiring borrowing are to be undertaken from external
debt only.
However, based on Report to Council OES 42-08, Recommendation 5, there was a
switch from external debt to internal loan for the component related to the Associated
Tools & Equipment-Fire Heavy Rescue Vehicle. This switch was necessary due to the
Fire Heavy Rescue Vehicle being purchased separately from the Associated Tools and
Equipment, and the differing useful lives of the Associated Tools and Equipment
resulting to difficulty in borrowing externally. The 2009 internal loan will be borrowed
from the Development Charges Reserve Fund in the amount of $500,000, to be officially
undertaken on December 31, 2009 and repaid through an allocation in the annual
current budget commencing in 2010. The annual repayment will be budgeted under the
current budgets. A further detail on this loan is as follows:
Report CS 44-09 December 14, 2009
Subject: 2009 Internal Loan & External Debentures Page 2 1
Description Project Terms Loan Current Fund. Total
No. Amount funded in 2008 Financing
Tools & 5340.0801 10 year $500,000 $2,900 $502,900
Equipment-Fire
Heavy Rescue
Vehicle
The internal borrowing rate is normally determined by using the Ontario Strategic
Infrastructure Financing Authority (OSIFA) rates and other comparable municipal
borrowing as a guideline or benchmark. The table below provides the current OSIFA's
lending rate for municipalities. This rate will be our official rate for the 10-year loan.
Terms OSIFA - As of October 20, 2009 Amortizer Debentures
10 year 3.96%
External Debt
For auditing purposes, previously approved 2008 and 2009 debt financed projects are
summarized in Attachment 1.
The total of all external debentures identified and required for 2009 is $2,546,000,
which we have officially requested the Region to borrow on our behalf as per
Attachment 2. The external borrowing rate will be determined by the capital markets at
the time of the issuance of the debentures.
Financial Burden
The annual loan and debt repayment charges are funded through the general property
tax levy in the annual current budgets.
The projected total of internal loans and debentures outstanding for December 31, 2009
is $19,065,798. Please refer to Attachment 3.
Sustainability Implications: This financing is necessary to provide the financial
means to sustain the City's capital investments in infrastructure.
Background: Continuous growth has created a need for capital infrastructure to
maintain the level of services provided to residents and businesses. Funding sources,
for capital projects are identified and approved by Council in the annual capital budget
prior to the commencement of the projects. The continuous growth coupled with aging
capital infrastructure calls for expansion to new facilities, repairs, and increased
replacement. This prompted the need for more borrowing to fund the capital projects. .
Report CS 44-09 December 14, 2009
Subject: 2009 Internal Loan & External Debentures Page 3
82
Total borrowings from the reserve funds to finance 2009 and prior years' capital projects
are projected at $2,299,828 for the year ended December 31, 2009. Such internal
borrowings require appropriate approvals and documentation in accordance with the
Municipal Act 2001, S401(1) and the Development Charges Act 1997, S36 O. Reg.
82/98 s.12 (2) 3,4,5.
Corporate Services will complete the necessary documentation including Promissory
Note indicating the amount, term, interest rate and other relevant information relating to
the internal loan and its repayment.
Under Resolution 144/99 the Mayor and Treasurer has the authority to sign the
Promissory Notes.
In the past we have always provided an annual formal report to Council on the capital
projects requiring debt financing, together with the. required debenture by-laws to be
enacted with terms and conditions being specified in detail. More recently, in order to
ensure that all proper documentation is ready and available whenever the Region
proceeds with any debenture issue, effective 2008, the City has incorporated the
debenture by-law with the report to Council when reporting on the results of the
tendering process. For auditing purposes, this annual report to Council also serves as a
report for information, providing a summary of all 2009 debentures approved by Council
with details indicated on Attachment 1.
Attachments:
1. 2009 External Debentures through the Regional Municipality of Durham
2. Letter for Request to Issue Debentures on Behalf of the City of Pickering
3. Total Projected Internal Loans & External Debentures Outstanding as at
December 31, 2009
Report CS 44-09 December 14, 2009
Subject: 2009 Internal Loan & External Debentures Page 4
83
Prepared By: Approved / Endorsed By:
Caryn Kong Gillis A. Paterson
Senior Financial Analyst - Capital & Director, Corporate Services & Treasurer
Debt Management
Copy: Chief Administrative Officer
Recommended for the consideration of
Pickerin City Council
Thomas J. Quin RD CMWI
Chief Administrative Officer
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ATTACHMENT #-L~-TO PIEPORT#L D I Pickering, Ontario
I I Canada L1V 6K7
_ Direct Access 905.420.4660
PICKET I G Toll Free 1.866.683.2760
1 1~ l~ cityofpickering.com
CORPORATE SERVICES DEPARTMENT 85
Department 905.420.4634
North Pickering 905.683.2760
Facsimile 905.420.5313
corpserv@cityofpickering.com
October 29, 2009
R.J. Clapp, Commissioner of Finance
Regional Municipality of Durham, Finance Department
605 Rossland Road East
Whitby, ON L1 N 6A3
Subject: Request to Issue Debentures on Behalf of the City of Pickering
This letter serves as a formal request to the Regional Municipality of Durham to issue
debentures on behalf of the City of Pickering.
Details of approved projects together with the named amounts and requested terms are
as follows:
Description of Projects Terms Amount
Artificial Turf Field at Bay Ridges Kinsmen Park 5-Year $499,000
Total- 5-Year $499,000
Supply and Delivery of One Heavy Rescue Vehicle 10-Year 680,000
Sideline 4 Road Reconstruction-Phase Two
Supply and Delivery of One Heavy Rescue Vehicle 10-Year 440,000
City Road Reconstruction for Sideline 4, Concession 5 to 10-Year 427,000
Highway 7-Phase 1
Total- 10-Year $1,547,000
Dunbarton Indoor Pool Renovation Project 15-Year 500,000
Total- 15-Year $500,000
Total Debentures $2,546,000
All items required by you and the Fiscal Solicitor in order to approve and prepare the
legal documentation relating to a debenture issue are attached. I hope this meets your
requirements.
Yours truly
Gillis A. Paterson
Director, Corporate Services & Treasurer
A17ACHMENT# TO REPORT# L-!! q-4' oq
86
City of Pickering
Total Projected Internal Loans & External Debentures Outstanding
As at December 31, 2009
2006 2007 2008 2009 Dec. 31, 2009
2001.-2005
Original Principal Principal Principal Principal Principal Outstanding
Amount Repayment Repayment Repayment Repayment Repayment Balance
Internal Loans
20011ssue $7,677,000 ($3,822,081) ($861,392) ($746,111) ($758,027) ($778,450) $710,939
20021ssue 1,224,000 (339,978) (120 236) (125 427) (123 509) (156 890) 357,960
20031ssue 349,071 (57,458) (31,233) (189,906) (10,526) (11,029) 48,919
20041ssue 267,000 (28,125) (29,245) (30,442) (52,500) (29,878) 96,810
20051ssue 287,000 (53,275) (55,262) (57,323) (59,651) 61,489
20061ssue 352,000 (78,801) (82,183) (86,268) 104,748
20071ssue 597,000 (78,445) (99,592) 418,963
20091ssue 500,000 0 0 500,000
Total Internal
Loans $11,253,071 ($4,247,642) ($1,095,381) ($1,225,949) ($1,162,513) ($1,221,758) $2,299,828
External Debentures
20021ssue $4,278,000 ($798,000) ($294,000) ($311,000) ($328,000) ($344,000) $2,203,000
2003Issue 3,494,000 (351,000) (369,000) (387,000) (408,000) (429,000) 1,550,000
20041ssue 1,537,000 (176,000) (184,000) (192,000) (200,000) (209,000) 576,000
20061ssue 2,792,000 (242,989) (254,648) (266,393) 2,027,970
20081ssue 8,506,000 0 0 (643,000) 7,863,000
2009 Unfinanced ' 2,546,000 0 0 0 2,546,000
Total Ext.
Debentures $23,153,000 ($1,325,000) ($847,000) ($1,132,989) ($1,190,648) ($1,891,393) $16,765,970
Total Projected
Loans &
Debentures $34,406,071 ($5,572,642) ($1,942,381) ($2,358,938) .($2,353,161) ($3,113,151) $19,065,798
* Await Region's, next debenture issue